The changing face of energy production

December 23, 2013

West Virginia's abundance of both underground and surface coal mining operations has been a bright spot in the state's economy for decades. But Gov. Earl Ray Tomblin pointed to two recent developments last week as evidence the state is no longer merely extracting coal and other natural resources from the ground.

The governor, speaking at the state's seventh annual Energy Summit at the Charleston Town Center Marriott, said recent investment announcements by Odebrecht, which evaluated construction of an ethylene cracker plant in Wood County, and Carbonyx International USA, which plans to build a synthetic coke plant in Jackson County, are key to building an economy that uses this state's resources in-state rather than shipping them to other states.

The economic effect of the Odebrecht plant alone could reshape this state's economy since its plans to take natural gas and convert it into other usable chemical products would mean a $3.2 billion investment in the state, according to a recent American Chemistry Council report.

This study predicted the cracker plant would lead to the development of other plants that would use its product - an overall investment of as much as $7 billion in new chemical industry activity annually and as many as 12,000 new jobs.

The governor said the Carbonyx plant, using "clean coal" technology to produce a more environmentally friendly replacement for coke which is used to make steel, could use as much as 1.75 million tons of West Virginia metallurgical coal annually. He said officials predict this additional demand for coal would also create or save up to 150 coal mining jobs plus 650 other jobs in businesses tied to the coal industry.

"It's thousands and thousands of new jobs for our kids - kids who are sitting in classrooms right now wondering what their future is going to be like," Tomblin said. "It's billions of dollars of economic impact that will affect every aspect of our economy, from locally owned grocery stores to plastics manufacturers."

The governor made it clear both these companies could have located anywhere in the world, so their decisions to locate in West Virginia are both "huge victories for our state, and they demonstrate that we're making smart decisions about creating a pro-growth business climate in our state."

No wonder Bill Raney, president of the West Virginia Coal Association, praised the governor's announcement. He said it was great news, particularly how important it is to "keep it here in West Virginia ... because right now we're sending coal to China and they're sending coke back to us."

Raney indicated he expects proposed U. S. Environmental Protection Agency regulations that target coal-fired power generation will eventually affect domestic thermal coal consumption, but he believes improvements in economic growth will still help coal mining in 2014.

Meanwhile, the bad news is that West Virginia has once again scored near the bottom of the list as a "judicial hellhole" in the American Tort Reform Association's annual report. The good news - if you can call it that - is that there have been some "modest" improvements and West Virginia has taken the fourth spot behind New York City, Louisiana and California.

It's nothing new. This state has ranked among the bottom five since this annual report was initiated and even ranked in the top spot five years ago. Tiger Joyce, the association's president, said in a news release that "with a legislature dominated by personal injury lawyers, too many trial judges willing to expand liability from the bench, and no intermediate level appeals court, West Virginia has become a perennial judicial hellhole."

However, the West Virginia Association for Justice claims the report should be discredited because it is inaccurate. A news release from the association said a 2007 New York Times report claimed the judicial hellhole report wasn't a valid analysis. And the president, Bernie Layne, described the report as "baseless attacks that damage our national reputation and hamper efforts to attract new businesses to our state."

The report also notes the lack of an intermediate court in West Virginia. But justices of the West Virginia Supreme Court claim new rules of appellate procedure are working - a position not shared by West Virginia Citizens Against Lawsuit Abuse. And the American Tort Reform Association notes that West Virginia is one of only two states without such a court.

Finally, the West Virginia State Board of Education has had control of Cedar Lakes Resource and Conference Center in Jackson County since 1950, when it was given to the state. It costs about $3 million annually to maintain, a million dollars less than the approximately $2 million in revenue it generates each year. So supporters of the facility are seeking a plan to save this struggling resort.

State Sen. Mitch Carmichael, R-Jackson, made a proposal to the state Board of Education meeting earlier this month that the ownership of Cedar Lakes be transferred from the state to Cedar Lakes Foundation. But he wants the process to begin in 2015 and continue over the course of five years when the foundation would gain full control. The State Board of Education will be consider that proposal at its next meeting in January and members of the board have indicated their support of the transfer.